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WOCCU Secures Temporary Exemption for Accounting Standards for Merged CUs

MADISON, Wis. - Except for a few isolated cases lately, hostile takeovers and leveraged buyouts don't typically happen with credit unions and the World Council of Credit Unions wants to ensure that merger rules don't cause such scenarios. At a recent International Accounting Standard Board (IASB) meeting, WOCCU pointed out...

By Staff Writer | Updated on April 06, 2004

MADISON, Wis. – Except for a few isolated cases lately, hostile takeovers and leveraged buyouts don’t typically happen with credit unions and the World Council of Credit Unions wants to ensure that merger rules don’t cause such scenarios. At a recent International Accounting Standard Board (IASB) meeting, WOCCU pointed out its experience in ensuring that CU mergers are understood including being exempt from the use of the purchased method of accounting. By the end of March, the IASB will publish the International Financial Reporting Standard (IFRS) 3 on Business Combinations requiring purchased accounting as opposed to pooling interest, the traditional method used by CUs. Cooperatives and mutuals will be excluded from the scope of IFRS 3 until an amendment is developed that appropriately recognizes the uniqueness of cooperative and mutuals’ mergers, said Dave Grace, WOCCU senior manger. “The fundamental issue is that we need to ensure that when two credit unions merge, the capital of the credit union being absorbed can be added into the continuing credit union,” Grace said. “Unless credit unions get the special treatment that WOCCU is advocating for the capital (it) may not directly transfer over and it may stop a lot of mergers that otherwise would make sense.”

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